OptionsHouse

Options Trading News

January 8, 2013  Tue 9:31 AM CT

MNST: SEE CHART GET CHAIN FIND STRATEGIES
Monster Beverage has been falling since the summer, and the bears aren't letting go.

optionMONSTER's Depth Charge tracking program detected the purchase of about 5,400 March 47.50 puts for an average premium of $2.82. Some 3,400 January 50 puts were sold at the same time for $1.34, but volume was below open interest in that strike.

It appears that the investor began the session with a bearish position in the March 50s, then adjusted the trade to increase leverage to the downside. He or she now has more contracts and an additional two months of exposure, which reflects a belief the energy-drink company will keep falling through late winter. Today's transaction cost an additional $1 million, so the trader is definitely betting on accelerated declines.

MNST is down 0.74 percent to $49.69 in morning trading and has lost more than 30 percent of its value in the last six months. Its last two earnings reports have missed estimates as the company struggles to keep growing at its former breakneck pace.

The shares have also been hitting resistance at their 100-day moving average since mid-December, which could be leading some chart watchers to expect the declines to continue.

Total option volume is 5 times greater than average so far today, with puts outnumbering calls by a bearish 33-to-1 ratio.
Share this article with your friends


OptionsHouse

Premium Services

Upcoming Webinar:

Using Options For Income

http://bit.ly/1nY1OKA

Jon Najarian and Adam Mesh of Options Wealth Machine discuss a detailed strategy utilizing credit spreads to generate income, and how any level of trader can use this simple trading technique.

Education & Strategy

Sweet Spot Exceptions

As discussed last week, when using the Stock Replacement Strategy to replace a stock position to trade direction, we want to use an option that has very similar characteristics to the stock. We talked about using the deep in-the-money, 80 to 85 delta option that is similar in the Greeks and has relatively little extrinsic value which tends to work against us in stock directional trading.

View more education articles »